If you are a foreign company planning to enter Nepal, one decision will shape everything that follows. That decision is private vs public company in Nepal.
Your choice affects ownership control, compliance burden, capital strategy, exit options, and even how regulators view your business. Many foreign investors assume a public company offers credibility. In Nepal, that assumption is often wrong.
This guide gives you a clear, practical, and legally grounded explanation. It is written for decision-makers who want certainty before committing capital.
Nepal’s corporate framework is built to encourage private investment first, with public companies reserved for scale, capital markets, or regulated sectors.
Choosing the wrong structure can lead to unnecessary approvals, higher costs, and operational friction. The right structure accelerates market entry and protects investor control.
Foreign companies typically fall into one of three goals:
Establish a wholly owned operating subsidiary
Create a controlled joint venture
Prepare for long-term capital raising or listing
Each goal aligns differently with private and public companies.
Company registration and governance in Nepal are primarily regulated under:
Office of Company Registrar
Companies Act 2006
Foreign Investment and Technology Transfer Act 2019
Industrial Enterprises Act 2020
Income Tax Act 2002
These laws clearly distinguish private vs public company in Nepal in terms of ownership, fundraising, disclosure, and compliance.
A private company in Nepal is designed for closely held ownership and operational control. It is the most common structure for foreign investors.
Minimum shareholders: 1
Maximum shareholders: 101
Share transfer restricted
No public invitation for shares
Lower compliance obligations
Foreign investors can own up to 100 percent, subject to sector rules under FITTA.
A public company is designed for large-scale capital mobilization and public participation.
Minimum shareholders: 7
No maximum shareholders
Mandatory public disclosures
Can issue shares to the public
Heavier governance and reporting
Public companies are common in banking, hydropower, insurance, and listed entities.
| Criteria | Private Company | Public Company |
|---|---|---|
| Minimum shareholders | 1 | 7 |
| Foreign ownership | Up to 100% | Allowed but regulated |
| Public share issue | Not allowed | Mandatory or permitted |
| Compliance cost | Low | High |
| Board structure | Flexible | Highly regulated |
| Suitable for foreign investors | Yes | Rarely |
This table alone explains why most foreign companies choose private entities.
Want full ownership control
Are entering Nepal for operations or services
Do not need public capital
Want faster registration
Plan IPO or public fundraising
Operate in regulated infrastructure sectors
Require large local capital participation
For over 90 percent of foreign investors, a private company is the optimal choice.
Submit proposed company names to the Office of Company Registrar.
Memorandum of Association
Articles of Association
Shareholder and director details
Parent company documents for foreign investors
Documents are filed digitally and physically with OCR.
Approval under FITTA via the Department of Industry or IBN, depending on project size.
PAN registration
Local bank account
Capital inflow compliance
Public company registration follows similar steps but adds:
Regulatory scrutiny of capital structure
Approval of prospectus
Mandatory board composition
Ongoing public disclosures
This process is longer, costlier, and rarely justified for market entry.
A critical factor in private vs public company in Nepal is ongoing compliance.
Annual returns
Tax filings
Basic corporate governance
Quarterly disclosures
Auditor rotation
Public notices
Shareholder reporting
Regulatory inspections
This difference impacts long-term operating cost.
Private companies allow simpler dividend repatriation, share transfers, and exits. Public companies require regulatory approvals and public disclosures at every stage.
For foreign investors focused on flexibility, private companies are superior.
Assuming public company equals credibility
Overestimating local capital needs
Underestimating compliance costs
Ignoring sector-specific restrictions
Avoiding these mistakes starts with choosing the correct structure.
If your goal is to operate, hire, deliver services, or build a long-term Nepal presence, register a private company.
Public companies should only be used when capital markets participation is essential.
Yes. Foreign investors can own up to 100 percent of a private company, subject to sector approval.
Yes. Conversion is legally permitted once regulatory conditions are met.
No. Most foreign investments in Nepal use private companies.
A private company is significantly faster and simpler to register.
No. Tax rates apply equally. Public companies only differ in governance.
Choosing between a private vs public company in Nepal is a strategic decision. For foreign companies, the private company structure offers control, speed, compliance efficiency, and flexibility.
Public companies serve a purpose, but only for specific capital-intensive strategies. For most foreign investors, they add cost without value.
If you want a smooth, compliant, and scalable entry into Nepal, start with a private company.